Question

In the​ Stockholders' Equity section of a Balance​ Sheet:

A.

Retained Earnings goes first.

B.

common stock goes first.

C.

preferred stock goes first.

D.

assets are listed first.

Answer 1

Stockholder's equity is the total amount of capital given to a company by its shareholder in exchange of stock, and any donated capital and any retained earnings if any. It is the sum of amount that the shareholder will be owned once debts and liabilities are paid off.

If a company is having both preferred stock and common stock, then the preferred stock is listed first in the stockholders equity section due to its preference in dividends and also during liquidation. We know that preferred shareholders are entitled to get dividends first before common stockholders. After preferred stock, the order will be common stock and then paid in capital in excess of par and then retained earnings.

So the answer for the question will be preferred stock.

Hence, option C is the correct answer.

SUMMARY:

If there is any preferred stock exist, then such stock is listed first in the stockholders equity section because such shareholders have some preference over others like in dividend and during liquidation. So while paying any dividend or any amount during liquidation, after setting all debt and liabilities, if there any sum remaining, then such amount is first given to preference shareholders.

Hence.option C is the correct answer.